Groundwater resource exploitation, financial feasibility, value and impact on livelihood: Evidence from Haromaya Wereda, Eastern Ethiopia

It is a well established fact that groundwater irrigation development has positive impact for enhancement of production and consequently improving the livelihood of users, although it could lead to over-exploitation of the stock. But there is lack of systematic evaluation of the groundwater irrigation. This study tries to estimate the optimal depletion rate of the resource and its impact on the livelihood of users. In addition, financial viability and monetary value of groundwater irrigation is assessed using three criteria of cost-benefit analysis and Residual Imputation Method, respectively. For this end a survey of randomly selected 200 households which comprised of 100 users and 100 nonusers from midland agro-ecological zone and from the lowland agro-ecological zone (50 from each) respectively was used. This was complemented by secondary data from various sources. The survey was done in Haromaya wereda, eastern Ethiopia, for 2011/12 season. From the spreadsheet optimization, it is found that the smallholder farmers of the area have been utilizing the resource less than the optimal rate and the resource is safe at its current stand. However, when the groundwater use expansion plan is considered the resource is under a serious danger to provide the safe yield for future generation. From private investor point of view investment on the development of shallow wells and borehole is financially viable in all criteria used in this study and it is also revealed that a liter of water from these structures has values of 0.015 and 0.012 Birr, respectively. In all descriptive analyses, irrigation beneficiaries have better expenditure per adult and net income from the sale of their produces as compared to the non irrigation users. All the matching methods show that the borehole irrigation users have more than 284 Birr larger average expenditure per adult per annum than the non irrigation users. However, there is no strong evidence for the difference in expenditure per adult equivalent between households who have access for shallow well and for rain fed users. In addition, the incidences of poverty as well as income inequality measures indicate that groundwater irrigation development through shallow well and borehole brought a significant impact on the poverty reduction. It is obtained that 54 percent of the rain fed dependent individuals spend below the local poverty line where as only 31 and 22 percent of shallow well and borehole irrigation users spend below the poverty line. In terms of poverty gap and severity of poverty measurements, users are better off as compared to the non users. The study also explored correlates of household level poverty and found that among others the larger land holding in v hectare, livestock, agricultural hand tools and non-farm income the better welfare of the households. On the other hand, variables like consumer-worker ratio, age of household head and number of adult male have negative correlation with household welfare. Based on these empirical findings, the following policy recommendations are forwarded; improve watershed management, expansion and improvement of wells, expansion of rural electrification, technical support to the farmers. Key Words: Groundwater, dynamic optimization, financial viability, matching estimator, regression analysis, poverty, residual imputation method, Haromaya, Eastern Ethiopia.